Employers Plan to Reshape Performance Management and Pay

Performance Conversation

Employers’ performance management and pay-for-performance programs are falling short, according to WTW’s 2022 Performance Reset Survey.

More than 90% of the survey’s respondents said driving performance across the organization was one of their top objectives. However, less than half said their performance management program was helping them to meet that goal. In addition, only one in four employers in North America – around 26% – said they were effective at managing or paying for the performance of their employees.

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“Our results show that performance management can be a key competitive differentiator, as can pay-for-performance programs,” said WTW Senior Director, Work & Rewards Alex Weisgerber. “While most organizations are currently planning for larger increases in 2023, the need to demonstrate to employees how their pay is tied to performance has never been greater,” 

Planning Ahead

While most employers recognize their performance programs are falling short of expectations, the survey found that North American employers already have several initiatives in place or are planning an enhancement of their programs.

According to WTW, three in 10 employers have strengthened the connection between performance management and career development. At the same time, half of respondents are putting in effort toward ensuring ongoing performance dialogue between managers and employees, especially in remote and hybrid environments. Despite that, only 17% of employers have improved their workers’ understanding of how their performance is evaluated, while 70% plan to improve employee understanding.

“Employers have their work cut out to raise the bar on their performance management programs. Many recognize that their programs have not kept up with the changes due to the pandemic and tight labor market, yet they have not taken action,” said Amy Sung, WTW’s Work & Rewards Global Growth Leader. “Ideally, employers will reshape their programs to correspond with new work styles and employee career aspirations, and provide a better employee experience.”

Image: iStock

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